Public Bill Committee

[Mr. Peter Atkinson in the Chair]

Written evidence to be reported to the House

FET 01 Memorandum submitted by Universities UK

Peter Atkinson: I shall begin with some housekeeping points. I remind the Committee that there is a money resolution in connection with the Bill, copies of which are available on the Table. I also remind Members that adequate notice of amendments should be given. As a general rule, I do not intend to call starred amendments, including any that might be reached during an afternoon sitting. Members can take it as read that they may remove their jackets while I am in the Chair.

Bill Rammell: I beg to move,
That—
(1) the Committee shall (in addition to its first meting at10.30 a.m. on Tuesday 12th June) meet—
(a) at 4.00 p.m. on Tuesday 12th June;
(b) at 9.00 a.m. and 1.00 p.m. on Thursday 14th June;
(c) at 10.30 a.m. and 4.00 p.m. on Tuesday 19th June;
(d) at 9.00 a.m. and 1.00 p.m. on Thursday 21st June;
(2) the proceedings shall be taken in the following order:Clauses 1 to 13; new Clauses relating to Part 1; new Schedules relating to Part 1; Clauses 14 to 21; new Clauses relating toPart 2; new Schedules relating to Part 2; Clauses 22 and 23; new Clauses relating to Part 3; new Schedules relating to Part 3; Clauses 24 to 27; Schedule 1; Clause 28; Schedule 2; Clauses 29 to 32; remaining new Clauses; remaining new Schedules; remaining proceedings on the Bill;
(3) the proceedings on the Bill shall (so far as not previously concluded) be brought to a conclusion at 4.00 p.m. on Thursday 21st June.
It is a pleasure to be here, Mr. Atkinson, and I look forward to serving under your chairmanship. This is the first Bill since 1992 to focus on further education training, which is important for a sector that is often felt to be neglected and undervalued. The Bill will help us to reform the supply side and to shape up to the skills challenge that Sandy Leitch set out clearly in his recent report. It will also address aspects of the Learning and Skills Act 2000.
The further education sector in this country provides learning opportunities for more than 5 million people a year. Those opportunities are crucial in providing skills for securing productive, sustainable employment, and they promote community and personal development. Sandy Leitch’s report should have cleared out any sense of complacency on the issue.
Although this is a relatively small Bill, it is an important one. It underpins our agenda to transform further education, which we set out in last year’s further education White Paper. The Bill includes the restructuring of the Learning and Skills Council, and it will make the council and the wider further education system more responsive to the needs of learners, potential learners and employers. It will also enable further education institutions to award foundation degrees only and will modernise arrangements for industrial training levies.
I have tabled amendments to make arrangements for improving unsatisfactory further education provision. Those and other matters that are covered in the Bill are important, and I am sure that we will discuss them in great detail. The programme motion proposes that the Committee meets twice today, twice on Thursday and twice on Tuesday and Thursday next week. That gives us a total of eight sittings, which I think is right to cover the Bill’s wide content. The motion was agreed by the Programming Sub-Committee, and I commend it to the Committee.

John Hayes: I welcome you to the Chair, Mr. Atkinson. Your perspicacity is matched only by your legendary benevolence, on which we lesser mortals will depend as we consider this important matter.
The Minister has set the scene by describing this as an important Bill. It is certainly an important subject. He referred to the Leitch report, and Opposition Members cannot help but conclude that the Bill would have been more fit for purpose if it had included more of the report. It is curious that the Further Education and Training Bill makes almost no reference to the content of the Leitch report and, indeed, the Government response to it. Having said that, I agree with the Minister that the further education sector is vital—it provides opportunities for people across the country to gain skills, to train and to be educated—and we celebrate the work of further education colleges as, I know, do all Committee members.
The Bill is important in a number of respects, which we shall debate at length. The Opposition want to tease out the unsatisfactory aspects of the Bill and support those that point in the right direction. However, we are disappointed that the Bill does not provide a more fundamental review of the circumstances affecting further education and training, together with a series of recommendations about how they might be improved. The programme provides sufficient time to debate the matters that are before us, and we look forward to doing so in a co-operative but sparky spirit, so that the legislation is scrutinised in an appropriate and thorough way. We support the programme motion.

Sarah Teather: I, too, welcome you to the Chair, Mr. Atkinson. This is the first time that I have had the pleasure of serving under your chairmanship. I am pleased to see the Under-Secretary of State for Education and Skills, the hon. Member for Corby on the Committee and hope that he will not find it too unpleasant an experience. This is a relatively brief Bill and, with the exception of the provisions relating to foundation degrees and intervention powers, it is also relatively uncontroversial, so I suspect that we will be able to deal with it rapidly.
In common with the hon. Member for South Holland and The Deepings, I am disappointed that the Bill does not herald the implementation of the recommendations in the Leitch report, but we assume that we will be back in Committee soon to debate those.
We are happy with the programme motion. If we are all brief and to the point, we should be able to get through this by the end of Thursday. Today, we will seek to probe issues relating to the relationship between local authorities and the Learning and Skills Council, and on Thursday we will express our serious concerns about the proposals regarding intervention and foundation degrees.

Question put and agreed to.

Ordered,
That, subject to the discretion of the Chairman, any written evidence received by the Committee shall be reported to the House for publication.—[Bill Rammell.]

Clause 1 ordered to stand part of the Bill.

Clause 2

Regional councils

John Hayes: I beg to move amendment No. 21, in clause 2, page 2, leave out lines 42 to 48.
We move now to the meat of the Bill, the first part of which deals with changes to the structure of the Learning and Skills Council, in that it proposes that the LSC be regionalised and its local offices come to an end. I know that hon. Members will want to debate the matter at some length, because it was aired on Second Reading in the House and discussed in the other place, where the Bill originated. There are contentious financial, organisational and administrative issues associated with that proposal.
The clause places the LSC under a duty to establish a regional LSC in each area of England specified by the Secretary of State, and to specify functions for those regional councils. Indeed, the regional LSCs will be able to exercise powers and functions outside their areas. This is a probing amendment to draw attention to that provision, because it is not clear what is meant by it. What kind of functions will be exercised outside the areas of the regional LSCs? In what circumstances might those functions apply? How would that be determined? What reporting and accounting would there be for all that process? Does the Minister perceive this matter to be a matter for all regional LSCs? Are all LSCs likely to operate outside their areas, or is this something that he anticipates will only take place in particular parts of the country, perhaps where there is an obvious overlap between responsibilities? It may be that a regional council that is focused around a conurbation may feel that it needs to operate in the suburbs beyond that conurbation. That could be the type of thing that the Minister has in mind andthat the Bill intends, but there is not a clear understanding, certainly among Opposition Members and I suspect across the whole Committee, of precisely how that process will work.
Amendment No. 21 is essentially designed to determine why these regional LSCs need powers outside their area and also to test the legitimacy of those powers. One might argue that there is a certain type of legitimacy in regional offices, and that there is a certain level of regional representation. I do not want to go down the road of considering regional government and all that that embodies, Mr. Atkinson, because you would not let me. The Opposition believe in proper democratic accountability and therefore, frankly, we are suspicious of bogus structures that offer no real legitimacy. However, notwithstanding that, it is important that the Minister makes it absolutely clear how this particular aspect of the Bill is likely to work in practice. To that end, I am delighted to move amendment No. 21, which stands in my name.

Sarah Teather: With your permission, Mr. Atkinson, I would like to make just a few comments relating to the clause to enable us to speed through our debate.
The Liberal Democrats are largely in support of the idea of moving to a regional structure, but originally we envisaged that process as being coterminous with regional government, which would have given those regional councils some type of democratic accountability. Of course, that gap is still there within the Learning and Skills Council, regardless of how we reorganise it.
With reference to amendment No. 21, I wonder whether part of the point of the amendment is to allow organisations based around cities, which may fall across regions. I wonder whether the Minister will comment on that issue. I can imagine a situation where there are regions, but there may also be a city that draws people for employment purposes from outside that particular region. In that situation, one would need to ensure that the planning of skills training is appropriate for people who live within a separate region. I wonder whether that is part of the point of the amendment.
I also wonder whether the Minister will say something about the representation of college principals or college governors in the new regional council structure. That issue has been raised with me by the Association of Colleges, which is concerned.
Finally, I wonder whether the Minister will explain how the regional structure will work with the national structure for the organisation of higher education.

Tim Boswell: May I begin, Mr. Atkinson, by welcoming you to the Chair? We have engaged on a number of important Bills in the past, and I hope that you will indulge me as I make what might be termed a substantive speech on this issue, which will preclude my doing so in a clause stand part debate or possibly at a later stage of the proceedings.
Before I go on, may I welcome the ministerial team, one of whom, the Minister for Higher Education and Lifelong Learning, I have already had discussions with on other matters this morning? I am also delighted to see the Under-Secretary of State for Education and Skills, the hon. Member for Corby, back in the team. I recognise the genuine contribution that they both make. May I also say, proleptically to later clauses, that I welcome the Under-Secretary of State for Wales, the hon. Member for Carmarthen, West and South Pembrokeshire? Although it would be apparent to anyone who has even the most limited knowledge of accents that I am not Welsh, I have a Welsh wife and certain Welsh educational interests. If nobody else raises Welsh matters, I may feel the need to do so later on.
Regarding the specific issue of regional councils, there is only one point in the Minister’s opening remarks this morning about which I have some reservations. It is a characteristic—a sad characteristic—of the present Labour Government that they tend to suggest that no social advance took place before 1997 and that everything good has taken place since.
I hope that we do not have that kind of discussion; indeed, knowing the Minister, we will not. I readily and happily concede that Ministers have made efforts in recent years, in some cases successfully, to improve what I hope is a common objective—to recognise, celebrate and develop our further education.
The Minister made a point about further education that I thought was somewhat inaccurate. Not only is he beginning to rewrite the history of the past—of the pre-Labour Government period—but he is beginning to elide the history of the present Government. He might have a bone to pick with the Minister for Science and Innovation, who was Under-Secretary of State for Education and Employment when the House considered the Learning and Skills Act 2000. My hon. Friend the Member for South Holland and The Deepings, who was a member of the Standing Committee that considered the 2000 Act, will recall that it passed through the House at some length, with more than 30 sittings in Committee, and I had the privilege of leading on the matter. The 2000 Act was rather important for further education, even if it was not confined to that subject.
I promise the Committee that there will be no further instances—if there are, I invite hon. Members to put me down—of my speaking as a former shadow Minister and saying, “We told you so at the time.” However, I start with one instance. The Minister will, of course, be aware of the 2000 Act, but it would be a self-indulgent to assume that he and his officials have read in full the transcript of that Standing Committee. However, I am sure that he will know about the amendment that I moved at 10.30 am on 9 May 2000, seven years ago, to clause 19. I invited the then Minister to accept this amendment:
“The Secretary of State may, by an order subject to affirmative resolution in both Houses of Parliament, after consultation with such persons as may seem to him to have an interest, (a) amalgamate, (b) divide, or (c) vary the area of operations of one or more of such local learning and skills councils.”—[Official Report, Standing Committee F, 9 May 2000; c. 309.]
I am afraid we went down to a resounding defeat on that occasion—it was three votes to 11—but had that provision been embodied in the 2000 Act, we would not have needed half of the present Bill, because Ministers could have moved the pieces around the chessboard. I say that in passing, but if the Minister cares to read that debate—I had not reread it until a few moments ago—he will see some interesting exchanges about the balance between central and local, and those exchanges will continue whatever form is used.
Without prejudice to the future of the Learning and Skills Council—I do not want to engage in that debate now—it is at least arguable or defensible to move to a regional structure, and the Minister will seek to justify that in Committee. However, I have reservations—some precise ones that I shall deal with in a moment and some general structural ones. It is not the first time that the LSC has been reorganised, but every time it happens—in this case it is being done formally by moving to a regional structure—there are other changes. We tend to be promised less bureaucracy, fewer committees and a general reduction in cost to the taxpayer.
The Minister will know that the reorganisation of the LCS is already under way internally, and, in a sense, that does not depend on and is not confined to the regionalisation agenda. Other changes are being made to the way in which the LSC operates, and they probably need to be made, if only to reduce costs, although that is not without difficulty, including for constituents of mine who work for it. However, the Minister needs to say clearly how much money will be saved by the move to regionalisation, by how much bureaucracy will be reduced in the interface with users of the LSC’s services and whether the arrangement can be sustained. I say that because, whatever aspirations Ministers may have had over the seven years since 2000, things have been subject to revision and change. That is my main point. I therefore invite the Minister to say that the present changes will be substantive, helpful and money-saving changes that will deliver a better and more flexible service.
I want the Minister to consider three specific points in relation to that. First, if he looks up that transcript, he will find some exchanges about function, and we persuaded Ministers of the day to change their minds slightly on the matter. There is the question of what might be termed home authorities for particular businesses. For a national employer—let us say Sainsbury for the sake of argument—it is clearly very important to have a relationship with the learning and skills council that will handle its needs and activities. The LSC will have an idea of the employer’s training needs, and it will want to discuss them with someone and to see that they are delivered—of course, the train to gain initiative will kick in to some extent. In future, will that be conducted at a national level by a designated officer within the LSC, or will it be done regionally to meet the needs of employers at that level? It is extremely important that that should happen, and Ministers need to comment on it.
There have sometimes been uneasy tensions, and one of the paradoxes about having a bigger regional structure, rather than a structure of 47 local councils, is that it will be less unequivocal about where to start. A company will have one head office and that is fairly easy to pin down in one local LSC area, but it may operate in each of the regions—for example, it may have its head office in one region but more of its activities in another. I would like the Minister to tell the Committee a little about how such arrangements with national level employers would work.
Conversely, the second area concerns small and medium-sized enterprises. Whatever else one says, we have had some good support in Northamptonshire built on the experience of the old training and enterprise councils structure, where we had an integrated chamber of commerce structure—we will not reopen that argument. At least if we had local employment needs, there was somebody available locally to talk to and—if one can use the phrase—broker with. Individual local employers have been able to make approaches at a local level.
I frequently become paranoid about not the concept of regional government, but its delivery and practice as it affects my constituency. Not only do I have the most south-westerly constituency in the east midlands—it is not far away from that of the Under-Secretary of State for Education and Skills, the hon. Member for Corby—but it is a substantial distance away from the constituency of my hon. Friend the Member for South Holland and The Deepings, who is also an east midlander. Conversely, my hon. Friend the Member for Rugby and Kenilworth is just over the border from me, and some of my people go to his schools, for example. However, that is a different region. When one is looking at SMEs, in particular, one is looking at dispersed rural areas—it is 100 miles to Nottingham, which is a long way to go to get a service. The Minister needs to give assurance, not least in terms of relations between the regional LSC structure and the local county structures, for example.

Angela Watkinson: In Havering, we have an excellent business education partnership, which is a member of the local chamber of commerce and has direct links with local employers and the local FE and HE college. Does my hon. Friend see a role for business education partnerships in feeding into the learning and skills councils?

Tim Boswell: I thank my hon. Friend for that intervention. Clearly, I do not want to caricature the position of Ministers. Ministers do not want everything to happen at the regional level, and they know that education and skills delivery will be local, but the important thing is how the links are articulated. My hon. Friend the Member for Upminster has eloquently mentioned education business partnerships, and I know that one or two of those have operated at a county level.
Employers’ organisations are also important. I used to be involved with the National Farmers Union. It tends to operate at a county level and also at a three-county level—it is clear that the Under-Secretary of State for Education and Skills, the hon. Member for Corby has some sympathy with the points that I am trying to make. We all agree that we need local delivery. We want to strip out as many layers of bureaucracy as we can, but we need to feel that there is some local ownership.
My final point concerns cross-boundary arrangements. Because of the geography of my constituency I take a particular interest in this. I have already mentioned that some of my constituents travel to the constituency of my hon. Friend the Member for Rugby and Kenilworth for schools, college and further education. It is very important that anomalies donot prevent the application of perfectly sensible arrangements for families—dad should be able to drop off a teenager at a particular college on his way to work, for example.
In conclusion, we can always play games in this area. We can devise ideal structures and they may not work. We can have ramshackle structures and, given good will, they may work. I am not caricaturing what the Ministers propose as one or t’other. We want the structures to work, and what has happened in the past has not been ideal. I am prepared to give a fair wind to what Ministers are now proposing, and I hope that it works. It is important that they are aware of the sensitivities and the history of debates on the matter. I would be grateful if Ministers were to consider the relationship with national level employers.
As I did not mention it earlier, perhaps I can also chuck in the issue of specialist or heritage skills. In my constituency, for example, there is a stonemason who has a very good operation and who takes on about three apprentices. That is difficult to deal with at a local level, because there is a small national need for such skills. Perhaps Ministers will add that to the list.
To summarise, my concerns are national employers, specialist skills, the relationship with SMEs and the way in which one achieves outreach to contact them however far from the regional centre of government they may be, and, finally, an assurance on cross-boundary issues. I have nothing but good will for the Ministers, if they can get this right and if they can simplify things. I hope that they will remember the maxim, which I quoted in those exchanges seven years ago, about Occam’s razor: it is unwise to multiply entities beyond the necessity for doing so. The less bureaucracy and the more delivery we have, the better.

Bill Rammell: This has been a helpful exchange to get to the heart of some of these matters. I listened with interest to the enthusiasm of both the hon. Members for South Holland and The Deepings and for Brent, East for formalised, regional, democratically accountable structures. I do not seem to recall that enthusiasm when we had a debate about elected regional government some time ago. [ Interruption. ] If I have misrepresented them, I apologise. However, there are structures to ensure that there is democratic accountability.
The hon. Member for Brent, East asked me a specific question about the role of both FE and HE colleges within the revised and reformed regional councils. We confirmed in Grand Committee in another place that
“we would expect all LSC regional councils to be business-led, drawing employers from the priority skills sectors in the region concerned.”—[Official Report, House of Lords, 23 January 2007; Vol. 688, c. GC329.]
We also stated that membership would include those with backgrounds in the trade unions, local authorities, college providers and higher education. In that way we will ensure that councils have a good understanding of the skills needs of the local communities that they serve.
I shall respond directly to some of the comments by the hon. Member for Daventry. His implied criticism was that the Government do not recognise that any social advance took place before 1997. I refute that: I recall that there were some social advances between 1974 and 1979—there were also social advances between 1945 and 1951 and between 1964 and 1970. More seriously, of course, there have been advances in the past under Governments of all parties.
In response to my statement that this is the first substantive further education legislation since 1992, the hon. Member for Daventry mentioned the Learning and Skills Act 2000. The 2000 Act affected further education, but it did not focus fundamentally and exclusively on further education, as this Bill does.
The hon. Gentleman asked me to recall his intervention seven years ago at 10.30 am, but I cannot exactly recall what I was doing on that occasion. However, I take his point that the Learning and Skills Council has achieved a significant success, but as the learning and skills landscape changes, it can and should evolve. No one seriously says that we do not need an intermediary body to fund learning and skills providers on the ground, but how the Learning and Skills Council undertakes that operation has, rightly, evolved and should continue to evolve further.

Jeremy Wright: The Minister is right. The structure must evolve, but as my hon. Friend the Member for South Holland and The Deepings has said, we expect the Government’s response to the Leitch review imminently. What happens if that response indicates that the Government intend to go for a sub-national arrangement that is not regional? How will that tie in with what the Bill proposes?

Bill Rammell: I will not pre-empt the Government’s response to Lord Leitch’s comprehensive report. [Interruption.] No, the Bill does not pre-empt it. There is a clear consistency and consensus between this Bill, which focuses on the supply side, and the arguments advanced by Sandy Leitch.
The hon. Member for Daventry raised issues concerning reform of the Learning and Skills Council and costs, which we will consider in detail later in our proceedings. I reflected long and hard on some of the statements made on Second Reading, and on the wholly extraordinary and erroneous claims by the Conservative party about the proportion of administration expenditure in the LSC’s overall budget. I hope that at the end of our debate some of those accusations will be withdrawn, because the proportion of expenditure on administration under the LSC has reduced from 4.6 per cent. to 1.9 per cent. of overall expenditure.
The hon. Member for Daventry asked me explicitly what savings the current restructuring exercise would deliver. The current restructuring will engineer savings of up to £40 million per annum. That needs to take account of all the changes, including the removal of the 47 local LSCs. On the non-executive side, through these changes we will reduce non-executive participants from 750 to 150, which will put things in much better shape.

John Hayes: The Minister is right. There were exchanges on Second Reading about costs. I want to be absolutely clear and candid about that, as I am sure that the Minister does, too. Is he saying that there will be an immediate saving as a result of the measure he just described, or that that saving will accrue once the reorganisation is in place? How much of that saving has already been announced? He would not want to be in the business of double accounting, any more than we would.
Will the Minister clarify what was meant by what the Secretary of State and others said on Second Reading about the savings only kicking in after some time?

Bill Rammell: A combination of changes is taking place through the existing Learning and Skills Council strand 7 of the “Agenda for Change” and the changes taking place as a result of the measures in the Bill, which will generate savings of £40 million per annum. I ask the hon. Gentleman to reflect on the claims made by Conservative Members on Second Reading that the Learning and Skills Council was spending £1.8 billion on administration and expenditure.

Phil Hope: Nonsense.

Bill Rammell: As the Under-Secretary of State for Education and Skills, my hon. Friend the Member for Corby has said, that claim is complete nonsense and without foundation.

Tim Boswell: On that point, I have had a most satisfactory correspondence with somebody whom I know at the LSC. I am satisfied that at least some aspects of the figures might have been overstated, but that does not mean that there is not a concern about bureaucracy. The Minister has said that he will cut the number of non-executive directors as part of the reform, which may slightly reduce costs. Can he assure the Committee that there will still be the same involvement at local level? It is important that people who are active locally in the business community are able to input to the LSC.
On the requirements for flexibility, from a cursory look at the Bill—I have not sought to amend it—it seems to me that the rigid structure that we criticised seven years ago will now be transferred to regions. If Ministers ever wanted to make things more flexible or to vary them, they would not appear to have the opportunity to do so through the Bill. Will the Minister consider whether that is worth re-examining?

Bill Rammell: I will discuss the specifics of that issue later, but the hon. Gentleman has made an important point. If we are reducing the number of non-executive directors from 750 to 150, what continuing contribution can those individuals, who have given significant service, make to the overall learning and skills landscape? There are a number of ways in which they can contribute. First, they can do so through direct contact and involvement with further education providers on the ground. Secondly, although we are—rightly, in my view—moving from 47 area councils to nine regional councils, we will also have150 partnership teams on the ground, so we will get both a regional and a localised interface, which is lacking from the current structure.
My experience as a constituency MP is one of the things that has convinced me of the need for change. Under the system of the 47 learning and skills councils, the council for my constituency covers the geographical area of Essex, which is as large as some countries in terms of both size and expenditure. The idea that there is the necessary degree of localisation in those circumstances is not borne out by the evidence.

Jeremy Wright: I want to take the Minister back to costs and savings and ask him to provide a bit more clarity. I refer him to the Learning and Skills Council’s annual report and accounts for 2005-06, in which Ray O’Dowd, whom he will know as the LSC “Agenda for Change” champion, described the changes that the LSC was making at that time:
“we will be working with providers in a more strategic, hands-off way. Working like this will need about 1,300 fewer staff, which will free as much as £40 million a year for investment at the front line. In the past year we have set out the reorganisation and staff changes that we need, and these should be in place by late 2006.”
I want to be clear that the savings of £40 million that the Minister has said will result from the proposals in the Bill are not the £40 million to which Ray O’Dowd referred in that document—Mr. O’Dowd suggested that the savings would be achieved by measures taken by the end of 2006.

Bill Rammell: I was talking about a combination of the LSC’s strand 7 and—[ Interruption . ] That is not a surprise; it is what I said about five minutes ago. I am talking about a combination of the strand 7 measures and the changes that will result from the Bill. I can update the Committee: through the strand 7 “Agenda for Change”, we now estimate that 1,100 net posts will be removed. Combined with the measures that we are debating, such as the move from 750 to 150 non-executive directors, that will create an overall annual saving of £40 million.
I know that we will return to this issue. We are looking for precision and clarity. I welcome the acknowledgment from the hon. Member for Daventry that what he and other Opposition Members said on Second Reading was without foundation. The claim was that the LSC’s administrative expenditure was£1.8 billion, and one can reach such a figure only by including learner support and capital expenditure, for example.
One of the things that I am very proud that this Government have done in the past 10 years is significantly to expand our capital expenditure. In 1997, not one penny was being spent in the mainstream capital budget; today, £500 million per annum is being spent. If that is administrative expenditure, frankly it is the type of administrative expenditure that people on the ground have been crying out for over an awfully long period.
The hon. Member for Daventry also asked whether the transfer of responsibility from local to regional LSCs will make it harder for SMEs to be involved in skills planning and delivery. I genuinely do not believe that that will be the case. Employers will make up more than 40 per cent. of the membership of the LSC’s national and regional councils, while at the local level, as I said earlier, the LSC’s 150 or so local partnership teams will work with a much wider range of stakeholders, including employers, to ensure that local learning and skills needs are properly identified.
I want to discuss the specific details of the amendment. It may be helpful for the Committee to recall that the Learning and Skills Council is the Learning and Skills Council for England. In that sense, it is a single, unitary body and I believe that that is one of its key strengths, enabling it to work at national, regional, local and sectoral levels. As we set out in the 2006 White Paper, we are strengthening both regional and local tiers of the LSC. The LSC has to be sufficiently flexible to work across regions, sectors, city regions, areas and cities, and also to engage with partners, employers and learners at every level.
The amendment that the hon. Member for South Holland and The Deepings has tabled seeks to remove the provision mirroring section 20(2) of the Learning and Skills Act 2000, which applies to existing local LSCs. That provision reconfirms, for the absolute avoidance of doubt, that the LSC has flexibility to secure commissioning and delivery of learning and skills in the most effective way possible.
So, for example, a regional council will be able to contract with and fund a learning provider operating anywhere in England, or indeed fund an institution that attracts students from outside its own specific area. A practical example of where that would be necessary would be in the event of a merger of two colleges in neighbouring regions. The legal entity would be in one region, but the LSC regional council for the neighbouring region would need to engage with that provider. That is notwithstanding the fact that the provider’s legal base would be in the area covered by a different regional council, possibly securing provision across regional boundaries. I think that that was the issue that the hon. Member for Daventry was driving at.
The amendment tabled by the Opposition would explicitly prevent that type of activity, as well as removing the ability of a regional council, where specified by the council, to undertake activity on behalf of the council for the whole of England. Although we intend that the regional councils will be underpinned by statute, I believe that the sub-regional structure needs to be flexible and responsive. The LSC will improve engagement through the 150 or so local partnership teams that I have already referred to, and there will be about one team per local authority area. I believe that those partnership teams will be much closer to local communities than the current 47 local councils, and therefore they will be better placed to ensure that the needs of learners are being identified and met.
Those local area partnerships, as flexible internal executive arrangements, are not specifically provided for in the Bill, but their job is to work directly with local stakeholders, including employers, local authorities and local colleges, schools and independent providers, to identify and meet the learning and skills needs of each area.
The LSC will have to consult learners and potential learners, as well as employers. It will also—rightly, in my view—work with the national learner panel and other learner networks to ensure that the voice of learners is genuinely heard. That is a very important issue and therefore we intend that the LSC will recruit and appoint a learner to the national council in due course, possibly this autumn. We also expect each LSC regional committee to include a learner as well. That is an important change and, allied with the other responses that I have given, I hope that the exchanges on this particular amendment have introduced some clarity, and I am grateful for having had the opportunity to contribute to that process.
The need for the regional councils to exercise functions that are delegated to them by the national council, both within and outside their area, is clear. These are sensible provisions that will enable the LSC to continue to operate flexibly and effectively. I therefore ask the hon. Gentleman to withdraw the amendment.

John Hayes: The Minister is a good and diligent Minister, and I am delighted that we will hear from him at length over the coming hours, days and weeks. May I also take this opportunity to welcome the Under-Secretary of State for Education and Skills, the hon. Member for Corby, who will no doubt be assisting the Minister with his usual skills? However, the beginning of this Committee has been a disappointment. Ihave been disappointed with his combination of obfuscation, rhetoric and assertion. We have also had some smear from the Minister about the record of the previous Conservative Government and about the content of speeches that were made on Second Reading. We need a little more accuracy in the way in which we deal with these affairs.
My hon. Friend the Member for Rugby and Kenilworth has made a revelation in the course of this debate, which is that the savings that the Minister reported at the beginning of his speech were a combination of savings already made and savings expected to be made. Given that my hon. Friend made it clear that the savings already anticipated as aresult of the reorganisation that he mentioned were£40 million, one wonders what contribution the new savings will make to that combined total, as £40 million plus zero comes to £40 million, does it not? £40 million plus another amount would come to something more than £40 million. We are not absolutely sure where those savings come from, how much more we expect to save, and what the LSC budget will be like at the end of next year as a result of these changes. We have had more heat than light from the Minister on that subject.
Turning to the two other matters of substance that have been debated, the Minister has made a good case on why, in certain circumstances, a regional LSC might need to act outside its area. That is the issue at the heart of the amendment, and I anticipated that to some degree—the hon. Member for Brent, East said the same—when I said that it was likely that in city areas one could understand that the employment base might not be coterminous with the regional structure, and that it would therefore be necessary to have some flexibility in the way that the organisation operated. To that end, the amendment has done its job, and as a result of probing, we have discovered what we need to be assured of. However, the other point that the Minister raises about the exact nature of these regional organisations and their relationship to localities gave cause for concern once again. If we are going to have this panoply of local bodies sitting beneath the regions, we may be reinventing the structure that we are now reforming. I can see a burgeoning of organisations and individuals that fill the gap that has been created by the very change to regionalisation that the Bill proposes. Is it not really the case that what is required here is a root and branch reform of how we fund and manage matters of the kind that the Leitch report recommends, and to which the Government will no doubt respond.
I recommend to the Committee—the Minister may not have had the chance to see it and it is highly relevant to this part of the Bill—the report published today by the Opposition’s economic competitive policy group, chaired by my right hon. Friend the Member for Wokingham (Mr. Redwood), on skills training for a more competitive economy. In that document, hot off the press, a case is made that is rather similar to that made by Sandy Leitch, that we need a fundamental rethink of how we fund and organise the management of skills, rather than this re-arranging of the deckchairs as we head for the iceberg that the Minister has articulated, and I am being generous by saying “articulated”. I shall withdraw my amendment because I do not want to start the Committee in an unnecessarily antagonistic vein. However, I hope that some of those matters will be clarified as the work of Committee develops, because I am still very concerned about the financial and organisational effects of some of the proposals that we have begun to tease out this morning.

Amendment, by leave, withdrawn.

John Hayes: I beg to move amendment No. 22, in clause 2, page 3, line 8, leave out ‘and local authorities’ and insert
‘, local authorities and sector skills councils’.

Peter Atkinson: With this it will be convenient to discuss amendment No. 25, in clause 7, page 6, line 38, after ‘employers,’, insert—
‘(ba) sector skills councils, or’.

John Hayes: The subsection that amendment No. 22 would amend specifies that the LSC must consult regional development agencies and other local bodies on guidance to regional councils. However, it does not specify that the LSC should have a duty to consult sector skills councils. Given the greater role envisaged by the Leitch review for such councils, and their significance in articulating the needs of employers and working with training providers to ensure that what is offered matches those needs, those bodies should at the very least be consultees.
Sandy Leitch—I make no apology for mentioning him again, because the Minister started by referring to the Leitch report in relation to the Bill—and the official Opposition would like sector skills councils to have a much bigger role. The report that I mentioned earlier, which I know will be on the Minister’s bedside table tonight, makes precisely that case. The sector skills councils should be the principal conduit for identifying need, explaining that need to the Department and working to accredit courses that meet that need with training providers in FE colleges and elsewhere.
That is not the Bill that we have before us; it is the Bill that we expect to see in the next Queen’s Speech, when the Government respond to the Leitch review and the new Prime Minister is at the helm. However, in order to reflect the importance of the sector skills councils, they should at least be consulted. Amendment No. 22 provides for that—it would make the sector skills councils statutory consultees in the process. Let me flesh that out for a moment. The Leitch review says at paragraph 4.25 that
“Sector Skills Councils (SSCs) are beginning to effectively engage employers. Over three fifths of employers who have had dealings with their SSC think that SSCs have had a positive impact on skills development in their sector. Nearly two thirds of employers who deal with their SSC are satisfied. This includes those employers who operate across a number of SSCs with different business and occupational areas. The evaluation shows that there are significant variations by sector in performance.”
However,
“employer satisfaction with the labour market information provided by their SSC”
is generally good.
In my judgment, the Government also recognise the importance of sector skills councils and are likely to do so all the more when they respond to the Leitch review. I cannot see why, therefore, they should reject the amendment; given the importance of SSCs, it would be perverse to resist it, and I know that the Minister will be eager to accept such a positive contribution tothe Bill.
Amendment No. 25 deals with the duty of the LSC to secure the provision of facilities for education and training. It would provide for the LSC, in performing that duty, to act with a view to encouraging diversityin education and training, and to increase the opportunities for individuals to exercise choice by consulting SSCs in line with the FE White Paper. Paragraph 3 states:
“Alongside learners, employers are the major customers of FE....We have now established a full network of 25 SSCs, led by employers to ensure that their needs and priorities for the skills that will support productivity are both articulated through SSAs and met through more responsive provision.”
In essence, our amendments reflect our determination to ensure that employer-led organisations are at the heart of the process. I hope that the Government will accept them in the spirit in which they are offered. Should the Minister be resistant to my pleas, at the very least I hope that he will take this opportunity to explain what role he sees sector skills councils playing in this consultative process and how he sees them interacting with the newly structured Learning and Skills Council.

Sarah Teather: Liberal Democrat Members are very supportive of these amendments. They seem perfectly sensible. If Sandy Leitch has recommended that post-19 provision needs to be employer-led, it seems sensible that the regional councils should be required to consult with the sector skills councils. I shall be curious to hear the Minister’s response to the amendments, but we are very supportive of them.

Jeremy Wright: May I belatedly welcome you to the Chair, Mr. Atkinson? I rise to speak in support of amendments Nos. 22 and 25 moved by my hon. Friend the Member for South Holland and The Deepings. I should say from the outset that the sector skills council that deals with the land-based industries, Lantra, is based in my constituency. Partly as a result of the work that it does, it is particularly important that these amendments find their way into the Bill. I, too, hope that the Minister will view them sympathetically. One of the reasons for that is that it is apparent from my discussions with Lantra that the sector with which it deals is specific in its requirements and very unusual in many respects. Whenever policy is formed and guidance and advice is constructed the land-based sector should therefore be included.
I hope that the Minister can help me with one particular issue and offer me some reassurance. If there is to be a regional structure, a case will inevitably be made for regional centres of excellence. In land-based engineering, for example, there is probably enough demand to justify five centres of excellence nationwide. With nine regions, each region will wish to compete for one of those centres. There will not be enough to go around and it would be inappropriate to create nine centres simply to meet that requirement. I hope that the Minister can reassure us that if we are to have a regional structure, there will be a mechanism for resolving those sorts of issues to ensure that the sector—the land-based sector in this case—is properly served with these centres of excellence and that there is a national overarching view to go along with the regional structure proposed in the Bill.

Tim Boswell: It will not have escaped the Minister’s attention that the two amendments bear on two slightly different bodies: one is in relation to the duty or obligation of the regional councils to consult and the second relates the council itself. In a sense that has been brought out in what has already been said. In addition to the other tensions we identified earlier there is also a tension between the council and sector skills councils and the operation of the relationship, such as it is, and whether it should be at a national, regional or local level.
The Minister owes the Committee some explanation of how that should work. Sector skills councils will have an important continuing role, but they need to have the right consultation mechanisms. My judgment is that they should be at both regional and national level. As my hon. Friend the Member for Rugby and Kenilworth pointed out, some facilities cannot operate below the level of the region and may need to have only a small number of centres of excellence. I mentioned the example of stonemasonry, although I do not think that that needs to be exclusive, but certain minority, albeit important, skills may need a single centre of excellence nationally. Those links need to be carefully deployed.
Some of my earlier scepticism about sector skills councils is being dissipated in the event. I am pleased about that. They are beginning to bed down. There was a hurry to move into a national structure. Ministers were rather pressing ahead with it, sometimes beyond the capacity of those centres. Those of us who know the area well will be aware of the strengths of organisations such as SEMPTA and Construction Skills, in the latter case based on a training levy, although we will not debate that issue today. They had some substance before they started. I have been impressed, in my recent work in connection with Pitcom, on the response to e-skills. There are other favourable cases: even Lantra, which I have known man and boy in my professional, as well as my policy, capacity, has now established itself and has a major contribution to make.
In terms of what the Government are proposing, and what Conservative Members are saying, there is a very important role for sector skills councils. They need to have the right relationship with the Learning and Skills Council as it operates nationally and regionally and the Minister should explain to the Committee how that will work in practice.

Bill Rammell: The hon. Member for South Holland and The Deepings set out his enthusiastic support for sector skills councils, which I welcome, as they are at the heart of the Government’s agenda in responding to the skills challenge.
The hon. Gentleman also said that according to the Leitch report, to which we will respond shortly, the sector skills councils will take on a more substantive role. He also alluded to the fact that Sandy Leitch recommends that we move even further in a demand-led direction. I agree with both those propositions and nothing in the Bill contradicts that approach. If hon. Members could identify what in the Bill stops us moving in the direction of the Leitch report’s recommendations, I would better understand their concerns. Ministers throughout the Department, especially my hon. Friend the Under-Secretary, regularly meet the sector skills councils.

Tim Boswell: Will the Minister accept that if legislation specifies certain bodies as consultees and excludes others, whatever his good intentions and however much he may wish it to happen in practice, there is different pressure to conduct consultations on those that are specified and those that are not? That is at the root of our concerns on the matter.

Bill Rammell: I will address that concern directly, as it is explicit in the regulations that we expect that engagement to take place with the sector skills councils.

John Hayes: The Minister asked me a question, so I thought I should respond through the Chair.
The critical matter is not what the Bill says, but what it does not say. If the Government’s response to Leitch reflects the principal message in that report, which is to move to a demand-led system with a very different structure—the Learning and Skills Council is not mentioned until 70 pages into Leitch—we anticipate that further statutory change would be needed to facilitate that new structure. We are not arguing that the Bill is necessarily unhelpful in that respect, but that it is a missed opportunity; it does not pave the way for such fundamental change. That is the essence of our point about the Bill.

Bill Rammell: That clarification is helpful, but I genuinely disagree with the hon. Gentleman. The critique that usually comes from Opposition Members is that we legislate too often when it is not necessary. To move the system in a more demand-led direction one does not need to legislate; we have already committed ourselves through the “Further Education” White Paper to moving to 50 per cent. of provision being demand-led by 2015. There is a debate to be had about how much further and more quickly we can go in that direction, but it does not require legislation. That is why I said that there is nothing in the Bill that contradicts Sandy Leitch’s recommendations.
The hon. Member for Rugby and Kenilworth talked about the importance of centres of excellence and how they can be recognised within the revised structure. I refer him to the previous debate; it is clear that we have a unitary council structure and there will be a national overview. If we had accepted the amendment, it would have been more difficult to ensure genuine national co-ordination when responding to the issue of centres of excellence. The hon. Member for Daventry raised concerns about centres of excellence. I remind him that we are moving forward with national skills academies, and we are committed to there being 12 by 2008. We also have an excellent network of centres of vocational excellence, which are developing the kind of best practice model that we need to see across the country.
I have made clear the importance that we attach to the work and role of the sector skills councils. They are the key to articulating demand for skills, to identifying priorities and to stimulating increased demand for skills among employers. Hence, they are a vital plank in the creation of a more demand-led system, as we outlined in last year’s White Paper on further education. Indeed, the importance of that role was acknowledged and asserted by Sandy Leitch in his recent report.
We have already ensured that the LSC involves the sector skills councils fully in delivering its functions, including regionally. The LSC works with the SSCs through sector skills agreements, which also bring together employers and other key partners, including the awarding bodies. The agreements set out each sector’s needs and provisions and the action needed on the supply side to meet skills gaps and shortages.
The LSC rightly consults widely with SSCs nationally and regionally through the regional skills partnerships, enabling it to respond effectively on skills priorities. In addition, the new LSC structure will allow it to work much more effectively in partnership with SSCs and employers and its many other partners. The nine regional councils, which will be given statutory underpinning under clause 2, will have a key role in developing strong collaborative relationships with key partners, including SSCs, in order to secure a strong link between jobs, training and skills.
Clause 7 makes it clear that other persons to be consulted may be expressly specified in guidance made by the Secretary of State. We have made available an illustrative draft of the statutory guidance, prepared in accordance with the Bill, to which the LSC must have regard. That draft makes explicit reference to consultation with SSCs and regional skills partnerships. It makes it clear that we expect the LSC to consult with the 25 SSCs and, once it has been established, with the new commission for employment and skills. That genuinely provides the reassurance that hon. Members seek.
Although I agree with the sentiment behind the amendments, I believe that they are not necessary. I would not want to refer in legislation to organisations that are non-statutory bodies. I said earlier that this is the first substantive piece of further education legislation since 1992. We do not want to pin ourselves down to specific bodies in primary legislation. Such organisations may change, and referring to them in primary legislation could therefore be without meaning. Given that, and given the draft regulations, I hope that the hon. Member for South Holland and The Deepings will feel able to withdraw the amendment.

John Hayes: The Minister assures us that, through guidance, sector skills councils will indeed play a critical role in the consultative process laid out in the Bill. However, there remain concerns. One is the narrowing of the membership of the Learning and Skills Council to 10 members, which was dealt with under clause 1; it will have fewer members than the Higher Education Funding Council, the Qualifications and Curriculum Authority and the Quality Improvement Agency. It seems that 10 is the new minimum. Another is the removal of localities from the system that regional councils will inevitably cause, notwithstanding what the Minister said about other sub-regional bodies. I also have doubts about what I would describe as a sort of bunker mentality, as the LSC comes under increasing pressure following criticisms from independent sources—the Leitch review envisages it withering away—and there are constant concerns about bureaucracy.
Those issues of consultation, liaison and responsiveness become ever more critical. However, I know that the Minister is genuinely committed to ensuring that all interested parties play a part. I hear what he says about the importance of guidance and, furthermore, hear what he says about the risks and dangers of enshrining some of these matters in primary legislation. A Minister of any political colour would take a similar view. Having heard him offer those assurances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 ordered to stand part of the Bill.

Clause 3 ordered to stand part of the Bill.

Clause 4

Strategies for functions of Council

Sarah Teather: I beg to move amendment No. 17, in clause 4, page 4, line 6, at end insert ‘, including—
(i) approved local area agreements (as defined in section 82(2) of the Local Government and Public Involvement in Health Act 2007), and
(ii) local improvement targets (as defined in section 83 of that Act);’.

Peter Atkinson: With this it will be convenient to discuss the following amendments: No. 18, in clause 4, page 4, line 8, at end insert ‘, including consultation with—
‘(i) responsible local authorities (as defined in section 78 of the Local Government and Public Involvement in Health Act 2007), and
(ii) partner authorities (as defined in section 79 of that Act).’.
No. 23, in clause 4, page 4, line 8, at end insert
‘, in particular, to determine the level of demand for specific skills in the economy’.
No. 24, in clause 4, page 4, line 39, at end insert
‘, in particular, to determine the level of demand for specific skills in the economy’.

Sarah Teather: With your permission, Mr. Atkinson, I should like to make some general remarks about the clause before going on to discuss amendments Nos. 17 and 18.

Peter Atkinson: Order. I am happy as we move on to different areas of the Bill to allow a wider-ranging debate on the first group of amendments. However, that means that any move to have a clause stand part debate will be looked at rather severely by the Chair.

Sarah Teather: Thank you for that clarification. In principle, we are very supportive of the clause. First, it establishes the skills and employment board for London, which brings democratic accountability to the organisation of training in London, and most critically, it allows it to be integrated with other economic planning and provision of services such as transport. That is particularly essential for a place such as London. As a London MP, I was quite excited by that idea, and felt that it offered a real opportunity to ensure that we take account of London’s uniqueness. London generates a large proportion of the country’s wealth, and draws in many of the tourists who come to this country, but we also have significant levels of unemployment and lower rates of employment than the rest of the nation.
London is by its nature a more transient place. There are waves of immigration and pockets of poverty and wealth are found side by side. Many other cities across the UK have those factors, but none in the same concentration as London. London has unique training needs because of that, which are heightened by the Olympics and the considerable building programme that goes with that. We support that aspect of the clause.
The second important thing that the clause does is to allow flexibility for sub-regional structures to be set up, and we support that idea in principle. We have already had a discussion about sub-regional structures and the need sometimes to take account of a city organisation and the way in which employment is drawn into a city hub. Amendments Nos. 17 and 18 are probing amendments designed to probe the relationship between any new bodies that will be set up, given the structures outlined in the clause, and local authorities. More specifically, they are designed to probe local area agreements.
I know that the Minister referred to some of those aspects in the discussion on clause 2, but I would like to push him a little further on this point. When local authorities set up local area agreements, they are designed to set targets for improvement between local authorities and their partners, and Government as a whole. My concern about the wording of the clause is that it appears to over-rule that, or appears to allow the Secretary of State to over-rule that. I would be grateful if the Minister could be clear about the relationship between existing partnership arrangements and any new bodies that might be set up. Obviously, it is essential that any new bodies take account of existing plans and partnerships, and I would like to ensure that there is consistency between the Bill and the Local Government and Public Involvement in Health Bill, which defines that relationship with local area agreements.
Local area agreements bring together a whole range of services, and economic development targets as well as skills and further education plans and partnerships that are outlined in local area agreements. It is essential that any new body works closely in collaboration with those existing plans. They are probing amendments that are designed to get on the record from the Minister exactly how that relationship will work and to ensure that it is consistent with the other Bill that is proceeding through Parliament at the moment.

John Hayes: I shall not add to what the hon. Member for Brent, East said about her amendments, although I am sure that the Minister will want to respond to her interesting and useful comments. I take her point that they are probing amendments, designed to elicit clarification.
On amendments Nos. 23 and 24, section 24A of the 2000 Act allows the Secretary of State by order to specify a body to formulate a strategy in relation to specified functions of the LSC for the whole of England or part of it. However, it contains no provision about consultation to determine demand, in line with the Leitch review. In tabling the amendments we are anxious to insert the term
“the level of demand for specific skills in the economy”.
Perhaps I should remind the Committee that the Leitch review says that
“analysis shows that previous approaches to delivering skills have been too 'supply driven', based on the Government planning supply to meet ineffectively articulated employer demand. This approach has a poor track record—it has not proved possible for employers and individuals to collectively articulate their needs or for provision to be effectively planned to meet them. Employers are confused by the plethora of advisory, strategic and planning bodies they are asked to input to. Under a planned system, the incentives are for providers to continue doing what they have done in the past so long as that meets the requirements of planning, rather than responding flexibly as demand changes”.
Our concern is that the system should provide what the economy needs. Like Lord Leitch, we believe that a demand-led system, with employers in the driving seat, does that best. I do not say for a moment that that does not depend on there being a partnership between educators and employers; of course it does. I said at the outset that I value immensely the role that further education and other training providers play in equipping our people with the skills that they need if they are to make a worthwhile contribution, as well as those that add to their well-being.
However, in an advanced economy, in which need is dynamic, it is critical to communicate demand as effectively as possible to trainers so that what is provided through the system accurately reflects real economic need. That is fairer to trainees and to employers, because all too often, people who have been trained have to be retrained when they obtain employment because the training with which they were provided was not up to date. It is difficult to be absolutely sure of achieving that, but it is most likely to be guaranteed, as Leitch argues, by a demand-led system. Our purpose is to assert that decisively, hence the wording of the amendment.
Amendment No. 24 concerns the function of the council in London when the LSC’s powers are delegated. It would require the body established by the Mayor to consult SSCs to determine the level of demand in London for particular skills. It, too, is born of our determination to ensure that, in a demand-led system, the needs of a particular locality are transmitted as effectively as possible. We believe that the SSCs will play a critical role in that regard. All SSCs are not equally strong; they are evolving and there will be further changes in the way in which they operate. However, they are the vehicle that should be used as a conduit for the supply of information about demand and to ensure that what is provided meets that demand. The amendments are designed to achieve that outcome and I shall be interested, as ever, to hear the Minister’s response to our helpful suggestions. They would improve the Bill and bring it into line with the findings of the Leitch review which, I can tell, will play a lively part in our deliberations.

Bill Rammell: It is some time since I have contributed to a wide-ranging debate on clause 4, but I am happy to be able to do so. For the record, may I correct something that the hon. Member for South Holland and The Deepings said when he summed up on the previous group of amendments? He asserted that it is Sandy Leitch’s view that the LSC will, over time, wither on the vine. That is not what Sandy Leitch has said. He has explicitly said that he is not in favour of ripping up structures for the sake of it and starting again, but that he is of the view, as am I, that the LSC’s role and function, and the way in which it operates, should continue to evolve.
Amendments Nos. 17, 18, 23 and 24 relate toclause 4 and the strategies for the functions of the LSC. Amendments Nos. 17 and 18 apply to directions and guidance about the consultation, and matters to which a body specified to formulate a strategy for an area of England outside Greater London is to have regard when formulating or reviewing its strategy. Similar amendments were tabled at Committee stage in another place. We considered the points that were raised, and have made a number of changes to the draft directions and guidance in relation to the formulation and review of the skills strategy for London by the London skills and employment board. Similar directions and guidance will apply to other bodies outside London. I am, therefore, pleased to be able to restate the reassurances given by my noble Friend Lord Adonis.
I agree that provision should be made in directions and guidance, but I do not believe that specific reference to these matters should appear in the Bill. While I agree that a range of bodies should be consulted, I cannot see a case for favouring particular categories of consultee by naming them in the Bill. If we were to go down that path, we would burden the Bill with unnecessary detail, and to name only some would be misleading and unhelpful. Those drawing up and reviewing strategies will want to have regard to existing local area agreements and local improvement strategies, as the hon. Member for Brent, East has asserted, and also to other relevant matters such as sector skills agreements. Again, I believe that the place for such matters is in directions and guidance, not in specific mention of them in the Bill.
Taking London as the first example, a list of bodies to be consulted and matters to which the board is to have regard is provided in the draft published directions and guidance. Those draft directions say, as the result of a debate on amendments tabled in another place, that the board must consult responsible local authorities where the authority falls partly or wholly in Greater London, and partner authorities where the board considers it appropriate. Directions also require the London skills and employment board to have regard to local area agreements and local improvement targets specified within them, which have been prepared by any responsible local authority where the area of the authority falls partly or wholly in Greater London.
I refer the hon. Lady to the documents about the Bill that we circulated to the Committee, particularly item (c), draft regulations on the strategy-making body for London, made under clause 4. Section 7 explicitly mentions the board’s having to consult particular bodies, including responsible local authorities, as defined in section 78 of the Local Government and Public Involvement in Health Act 2007, where the area of the authority falls partly or wholly within Greater London, and each of their partner authorities within the meaning of section 79 of the Local Government and Public Involvement in Health Act 2007 where the board considers it desirable to do so. I hope that that provides the reassurance that the hon. Lady seeks and that she and the hon. Member for Leeds, North-West will feel able to withdraw their amendment.
Amendments Nos. 23 and 24 would provide that, where directions and guidance about consultation are given by the Secretary of State, the particular need to consult to determine demand for specific skills in the economy should be considered. I agree that the level of demand for skills in the economy is an exceedingly important issue as we formulate or review our strategy, but I do not see a reason to refer to it specifically, when we do not refer to other matters of equal importance, such as improving employment and tackling worklessness.
The demand for specific skills, along with many other relevant matters, will be taken into account in our strategy. It would not be appropriate to refer to just one matter in the Bill, and to include all relevant matters would over-burden the Bill with too much unnecessary detail. For those reasons, I ask the hon. Member for South Holland and The Deepings not to press his amendment.

Peter Atkinson: Order. The hon. Member for Brent, East will need to withdraw her amendments at the end of the debate, but if the hon. Member for South Holland and The Deepings wants to speak, now would be the time for him to do so.

John Hayes: Thank you for your indulgence and advice, Mr. Atkinson. We need to be absolutely clear. The Leitch review is explicit in its advocacy of a demand-led system, which I think the Minister has fully acknowledged. The report is unequivocal about the changes that would be needed to achieve such a system. The Learning and Skills Council is not mentioned in any significant way until page 73, and then in not particularly glowing terms. In describing the move from a supply-driven to a demand-driven system, Lord Leitch says:
“The LSC allocates funding on the basis of expected demand. If demand does not meet expectations, funding for subsequent years is adjusted. This can mean that colleges aim to ‘recruit’ employers and individuals into planned courses to fill places, rather than responding flexibly to demand.”
The assumption underpinning the report was that the current system does not always deliver, which is reflected in our skills performance. The Ministers on the Committee have been straightforward about that in the past. We need to improve our performance radically, particularly in intermediate and higher level skills, where we lag behind France, Germany, the USA and other competitors.
The purpose of our amendments is to enshrine in the Bill the principle of responsiveness to demand. There is no difference of principle between us in that respect, but the Minister has made the case that the amendments would entangle the Bill in a level of detail that would not be appropriate from a legislative perspective. I hear what he says, but I use this opportunity to probe and to reinforce my absolute determination to ensure that the principle behind the Leitch report, of moving from a supply-driven to a demand-driven system, should inform all that we do in the Committee, as well as future public policy. Having heard the Minister’s assurances, I beg to ask leave to withdraw the amendment.

Peter Atkinson: Order. The hon. Gentleman does not need to withdraw the amendments, because they have not been moved.

John Hayes: I take your advice, Mr. Atkinson.

Sarah Teather: I thank the Minister for his helpful response to our amendments. As he assures me that the requirement to consult with local area agreements will be written into guidance for all areas, not just for London, I am happy to beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 ordered to stand part of the Bill.

Clause 5

Young people’s learning committee and adult learning committee

Question proposed, That the clause stand part of the Bill.

Tim Boswell: We talked earlier about the multiplication of committees and these are two that are going. I am not sure that we need them in the statutory form. I would simply like to reinforce to the Minister my view, which I think he probably shares, that the importance of the development of adult skills is particularly intense because we know that we have a skills gap—it has been identified by the Leitch report. We also know that most of the people who will be in the work force by 2010 are already in that work force now. It is impossible to upskill the country simply on the basis of recruitment, particularly as the cohort of young people is now beginning to turn down. We must address adult skills.
On reflection—indeed, to some extent I felt this at the time—my main reservation about the Learning and Skills Act 2000 is that it gave emphasis to the 16 to 19-year-olds. As I said on Second Reading, the Government have helpfully extended that group to14 to 19-year-olds. I have no problem with that. However, I think that it is extremely important that we now emphasise upskilling in the adult community. That requires, for example, the active involvement of the sector skills councils, and in educational and pedagogical terms it often implies a more flexible approach than we have traditionally delivered in the younger age group. So this is simply a warning and a reinforcement to Ministers of something that I think they know about, which is that we need to tackle this issue very seriously.
I think that my hon. Friend the Member for South Holland and The Deepings also has a contribution to make on this subject.

Greg Mulholland: May I say, Mr. Atkinson, what a pleasure it is to serve under your chairmanship?
Very briefly, I wish to reiterate the comments made by the hon. Member for Daventry, to emphasise the Liberal Democrats’ concerns with regard to adult education. As the Minister will be well aware, there have been concerns expressed, particularly by the National Institute of Adult Continuing Education. Regarding the clause, NIACE has said that it is concerned that adult education and training is losing much of its statutory underpinning. This is a very good opportunity for the Minister to refute that view. Although we understand the need for flexibility, which is the reason given for the clause, it is vital to tackle that crucial area of concern at this stage, and I hope that the Minister will do so in his brief comments.

John Hayes: My hon. Friend the Member for Daventry is absolutely right that the critical need is to upskill and reskill the existing adult population. Even if we got skills training absolutely right from the perspective of young people, the demographics make it clear that, unless we upskill and reskill the existing working population, we will not be able to meet the targets necessary if we are to remain economically competitive. That also means examining the access to learning and the re-entry to learning. I am very concerned about the decline of adult and community education. I make no apologies for saying that the loss of a number of adult and community places has been a disgrace, and I hope that the Minister might comment on that issue.
The clause abolishes the two statutory LSC committees—the young people’s learning committee and the adult learning committee. I draw attention to adult and community learning because, if we are going to upskill and reskill the existing working population, it is critically important that we are as lateral in our thinking as possible about the routes to learning, including the re-entry to learning for many people who have perhaps been failed by the system the first time round.
These two committees provide an important voice for adult learners within the system and it would be interesting to hear from the Minister as to why he feels that they should go. They are low-cost and they provide valuable scrutiny of the LSC’s work on age-related issues. In particular, with the abolition of the adult learning committee and the end of an independent adult learning inspectorate, it appears that the distinctive nature of adult education and learning is losing much of its statutory underpinning.
These may seem like minor matters in relation to the Bill, but they speak volumes for very significant issues about adult learning. Many of us are strongly committed to the principle of adult learning. A few days ago, I was at the City Lit college in Covent Garden, which I am sure that both Ministers will know well. There are 52,000 enrolments and 3,000 courses there. The courses are overwhelmingly, perhaps exclusively, non-accredited and are attracting learners of all kinds, of all ages and from all backgrounds into education and back into education. The work of organisations such as that college should be celebrated. It deserves a voice in the system. I am concerned that in a small way clause 5 will diminish or quieten their voice unacceptably. I would be interested to hear the Minister’s comments on that.

Phil Hope: It is a pleasure to serve under your chairmanship, Mr. Atkinson. May I thank hon. Members for their kind remarks? It is good to be here in Committee. It is great to be with the hon. Member for South Holland and The Deepings whose articulate and eloquent contributions in Committee I know of old. He never uses one word when three or even more will do. That is always a real pleasure.
The clause means that schedule 3 paragraph 1(1) of the Learning and Skills Act 2000, which places the Learning and Skills Council under a duty to establish both a young people’s learning committee and an adult learning committee, shall cease to have effect. I will try to address the points that hon. Members have made, but first I should like to pay tribute to the work of both committees. They have played an important role in advising the LSC over several years and have worked extremely hard in promoting those interests. The evidence before us illustrates the work that they have been doing. There are now more young people in learning than ever before. We have more apprentices in learning and more young people completing their apprenticeships than ever before. More adults are improving their basic skills.
The hon. Member for Daventry is absolutely right: it is important that we now look at the existing adult work force. The hon. Member for South Holland and The Deepings made the point that 70 per cent. of the work force that will be there in 2020 is already in place. As well as working to improve the skills and employability of young people coming through the education system, we need to upskill the existing the work force. That is common ground between us on where we need to go.

Jeremy Wright: Does the Under-Secretary agree that one of the reasons why the points made by both my hon. Friends are so important in this context is that, whether or not we regard education as a lifelong experience, our wish to encourage people to reskill and upskill is to some degree informed by the way in which they see some of these non-accredited adult education courses being treated? That is why it is important, with or without the existence of the committee, that we continue to ensure that adults have access to that kind of learning too.

Phil Hope: There is agreement across the Committee about the points that the hon. Gentleman makes. Adult funding has increased by 48 per cent. since 1997. That is a real terms increase of 48 per cent. Indeed, over the next two years adult education funding will increase by a further 7 per cent. So this is a track record of growth and investment in adult education. Of course, we had to ensure that that funding is focused on our priority, which is—this is the point that the hon. Members for Daventry and for South Holland and The Deepings are making—those adults, who, let us be honest about it, were let down by education 10 or 20 years ago.
These people are in the work force now and do not have basic literacy skills. They do not even have a first full level 2 qualification, the basic platform for employability. Through the train to gain initiative and the growth in the demand-led approach, which meets the needs of employers, we will both raise the skills of individuals in the work force and meet the needs of employers to improve their productivity and their profitability.

Tim Boswell: Would the Under-Secretary concede—I do not attach blame to him on this—that there has been considerable concern at local level about cutbacks in the delivery of community education, notwithstanding the fact that he has ring-fenced some money towards that? That is an example of our concern, to which the Minister is trying to respond.We need the non-threatening, positive educational experiences that many such adults failed to achieve during their schooldays.

Phil Hope: I understand the point that the hon. Gentleman makes, but most of the reductions in courses that he describes were in short, non-priority, non-accredited provisions that did not offer opportunities for individuals to progress to further learning or to gain skills for employment.
The hon. Gentleman also raised an important point about wider adult community learning. The Government are absolutely committed to adult learning in the broadest sense. That is why, through our strategy for personal and community development learning, we have this year ring-fenced £210 million to ensure new partnerships at the local level. They will be led by LSCs, and they will bring together all the partners, including local authorities, the LSCs, the voluntary sector and organisations such as the Workers Educational Association. Working in partnership, they will be able to ask, for such courses and for this kind of broader learning, what strategies can be put in place to maximise the various contributions made by different organisations in order to reduce overlap and ensure that those who do not benefit from such opportunities can benefit in future.

John Hayes: As ever, the Under-Secretary speaks with great sincerity and commitment. The point that we want answered is what proportion of the adult courses that have been lost relate to employment? He is right to emphasise that those that do not are far from valueless, and that education is more than equipping people to get work. However, I am anxious about the number of courses that have been or are being lost that could lead to further study or that might directly relate to employment.
I do not expect the Under-Secretary to answer that off the top of his head, but it might be useful if he considered the matter and gave the Committee some information about the proportion of courses that fall into that category. Put simply, my worry is that we might be throwing the baby out with the bathwater. By focusing on accredited level 2 courses, we are narrowing the opportunity for people to return to education who could then move on to further learning, which might aid or facilitate employment. We need that information in order to get to the heart of the matter.

Phil Hope: The hon. Gentleman makes a fair point. However, he was earlier praising the role of the sector skills councils in determining, through labour market information, the kind of economically valuable skills and the qualifications that reflect those skills; it is that which drives the system. I agree with him; it is in exactly the direction that we wish to proceed.
The hon. Gentleman also argues that there may be other courses and other developments, and we recognise that. However, if we are serious about allocating public money—the taxpayers’ money—to those areas where there has been a market failure, whether in literacy or numeracy or in the level 2 qualifications that meet the employers’ needs, it is right to focus those resources on places where market failures have occurred so that we can get people into learning for the first time.
The hon. Gentleman will know of learners, and I have certainly met many, for whom the light bulb was switched on when they undertook their first course, perhaps in literacy; they became switched on to learning in a way that had never happened before, because of the education system’s failure. From that moment, they started on a progression, going on courses that they would never have taken up previously. 
The philosophy of taking people who have been let down in the past and focusing resources on them, putting them on the first rungs of that ladder to learning, is important for them, their families and communities; but it also benefits the employers who provide the job opportunities, promotion, productivity and so on. It is not either/or; it is both. As for public money, we must clearly focus our resources on those who need it most.

John Hayes: This is a critical debate. The Minister will know that one of the biggest growth areas in the labour force is among the non-employed. Over the past15 years, a large number of formerly non-employed people has joined the work force. I am not speaking of NEETS; I speak more of the mature women who return to work after bringing up the family. They often find their way back to work, through re-entry to education, after some time out of employment, and I want to tease out how many of them come in through adult and community learning, perhaps initially in non-accredited courses. I hope that he might look at that and bring back further information, as I am not clear about the numbers. I think that the Committee would benefit from having a feel for those numbers. He is right that it is not either/or, but we need some specificity about the significance of adult community learning as a route back into employment for the kind of people whom I have described.

Phil Hope: Without wishing to prolong this debate too far, and to stay with the point of the clause, the issue here is progression. What opportunities at alocal level, whether via employment or through community—doing a 10-year college course or perhaps doing something in the local library or through LearnDirect; there are many other routes to learning—allow people to progress? Not just to take a course, and then another, and another, and go round and round in circles, not getting further forward: what can we do to ensure that the vision at a local level generally offers progression for individuals?
The hon. Gentleman is right to say that that is not a decision that can be made in Whitehall; it has to be made at a local level by local providers where, through our rigorous emphasis on quality, we are able to make a judgment at a local level that that is a course that helps individuals to start learning and to make progress, as opposed to a circular, revolving door of course after course that does not give them the needs to move into a job or to improve their lives or skills as parents as members of the community.
That quality issue is what the hon. Gentleman is really getting at. Are we making sure that, as we drive forward our priorities, as we deliver literacy, numeracy courses, level 2 qualifications, and courses in the community to engage people for the first time, we are doing so by funding those course providers who are providing the best in terms of quality to allow people to progress? That is the point that the hon. Gentleman made earlier about the decline. We do not want to put Government and public resources into courses that are short, that do not give people progression, that do not give people qualifications, and do not provide what the hon. Gentleman asks for.

Gordon Banks: Does my hon. Friend agree that even within the private sector a great deal of provision is provided by distance learning? It is a vital role that fits neatly into the jigsaw that Ministers have presented to the Committee today.

Phil Hope: Yes—I was distracted and diverted away from the key point—my hon. Friend is absolutely right. There are many providers in the private sector, the public sector and the third sector that have the ability to reach out and contact individuals in communities who would otherwise not see themselves as returning to learning by going to a college or school. That is the one thing that such people will not do—it is anathema to them.
There are innovations and new approaches that private providers in the third sector can take, particularly at a local level. There are partnerships through personal community development learning, which I have mentioned, andI hope to see that strengthened at a local level to engage people in learning. Those people may not necessarily be learning to get a qualification, as the learning may be for their own personal development or leisure.
I shall return to the clause. I want to confirm to the hon. Member for Daventry that the proposals are about removing a statutory requirement to establish an adult learning committee and a young persons’ learning committee. By removing that requirement, the clause will give the LSC much greater flexibility to respond to the complex, changing needs of learners, employers and communities.

Robert Wilson: Can I confirm that the abolition of those two committees means that there will be no financial saving?

Phil Hope: I cannot confirm that there will be no financial saving, because there will be a reduction in that statutory structure. If the LSC does not have two statutory committees, we expect it to consider replacing them with a single committee. There may be a minor financial saving to the sub-committee of the LSC national council itself. That single committee may look in the round at all the interrelated issues to do with the needs of young people, adults and the FE sector work force. We are taking other measures, which may involve expenditure, to strengthen the voice of learners generally in learning and skills.
Clause 7, to which we shall come later, makes new provision for the LSC to consult learners. We will also recruit and appoint a learner to the national council in due course—possibly this autumn—and we expect each of the regional committees, which we debated earlier, to include a learner. In addition, we will use the national learner panel and other learner networks to ensure that the learner voice is heard. We also expect the LSC to convene regular stakeholder forums and advise the council. It may even establish time-limited groups to look at specific concerns and make recommendations on the way forward. To take one example, in November 2006, the non-statutory working together strategy committee focused on the council’s work with the voluntary and community sector—the third sector.
I cannot guarantee that there will be savings or costs either way. However, in removing the statutory requirement for the two committees, we expect that the LSC will provide a range of new measures to consult learners and hear their voice during its deliberations.

Question put and agreed to.

Clause 5 ordered to stand part of the Bill.

Clause 6

Duty in relation to diversity and choice

Question proposed, That the clause stand part of the Bill.

Sarah Teather: I want to probe the Minister a little further on the purpose of the clause. When we talk about diversity, there is sometimes a danger that we talk only about diversity of providers, when what the learner wants is diversity in the provision of courses. Few people particularly care who provides the courses; they want to know whether the type of course that they want to study is available locally and whether it is of high quality.

Angela Smith: Is it not the case, however, that many young people need different environments for their learning post-16 and even before? Is it not the case that some need a pastoral sixth-form environment, whereas others will survive perfectly well and, indeed, flourish in the independent learning environment of a sixth-form college or further education college?

Sarah Teather: I take the hon. Lady’s point, but that is not what I was getting at. The point that I am trying to make is that much of what has been said about diversity relates to competition between private providers, who come in and provide one type of course, as opposed to colleges that provide a range of courses. However, I accept the hon. Lady’s point about a sixth form versus an FE college environment, which is valid.
Colleges have expressed concern that private providers will often undercut them on the cost of a particular course, because private providers do not do many of the more complex things that colleges do, such as providing for vulnerable young people or working with schools on their increased flexibility programme, for which all colleges complain that they are not fully funded. It is therefore quite easy for colleges as a whole to be undercut, and all that I am trying to establish is whether we will continue to safeguard the whole range of courses that young people may want to take, rather than focusing on different types of providers who provide the same course.

Tim Boswell: I very much echo the comments that have been made and, in a sense, I rise only to reinforce those that were made about clause 5. We are talking about a mixed economy, which will function best if people have the widest variety of institutions and vehicles, including workplace institutions, in which to carry out their studies and the widest range of modes of delivery to help them to do so, including distance learning, which we have not discussed but which is important.
There are some structural questions about the way in which the Government channel the money, and I have some slight reservations, although not in a contentious way, about train to gain. I agree with the Minister that we need to put the emphasis on business employment, which he discussed under the previous clause, and the train-to-gain mechanism, although it has not yet been fully tested, is at least interesting. However, what I would not like him to do—I do not think that he has done this yet—is to put all the funding into that mechanism and leave nothing for other activities.
As we have discussed, Ministers may need to reserve some money for national competencies and networks of vocational excellence. However, it is extremely important and in the spirit of clause 5, which we have just debated, that we consider the position of the individual learner. I still have considerable sympathy with the concept of individual learner accounts. We will not debate what went wrong last time—I am not sure whether any of us quite knows—but it is valuable to give people the opportunity to unlock their own potential and to make their own choices as stakeholders in the process. We should facilitate and celebrate that. The clause is facilitative and positive, and I therefore welcome it.
We need a market-driven system, because we live in a market economy and have competing providers. We also have competition in the choice available to individuals, whom we need to empower particularly in relation to the social return of their own learning. It may be that those at later levels can cope with the process and self-fund, but we need to keep all that in mind. The clause should help us to deliver that mixed economy or at least to debate whether it is taking place. It is important for us to encourage that, and when Ministers get something right, we should encourage them in doing so.

Bill Rammell: The debate has been short but instructive. I agree with the hon. Member for Brent, East that there should be diversity of not only provision of courses, but providers. We should certainly be seeking the highest possible quality, and we should acknowledge the improvement in quality in both further education colleges and independent providers in the past five to six years. In further education colleges, for example, the success rate has risen from 59 per cent. to 77 per cent., which is a very significant improvement in performance.
I also agree explicitly with my hon. Friend the Member for Sheffield, Hillsborough that in the provider structure we need a range of provision for the individual at a local level, whether that involves a school sixth form, a sixth-form college, a further education college or an independent provider. Often the judgment will be for the individual to make based on their particular circumstances.
I respect the track record and involvement in the issue of the hon. Member for Daventry. However, I am getting a little confused. In previous debates, I have heard strong demands from the Opposition Benches that we should implement what Leitch said about moving in a demand-led direction. Now we hear that not everything should lead in a demand-led direction and that we should hold back on some things. If there is a need for clarity from the Government, then I think that there is a need for clarity from the Opposition.

Tim Boswell: Perhaps I can assist the Minister by saying, as a matter of general principle—I have no executive responsibility for this, as he will have noticed—that my view is that we need to move towards a demand-led system. I merely suggest to the Minister, if only for his own protection, that he should moderate or modulate that approach by giving a proportion of assistance for self-funding and self-selection to supplement the system but in no sense to take it over.

Bill Rammell: I think that those comments were directed at the hon. Member for South Holland and The Deepings rather than at me.
I strongly agree with the hon. Member for Daventry about the importance of individual learning accounts. If he examines the commitments that we gave in the further education White Paper, he will see that we have made it clear that from September we will trial individual learning accounts at level 3. We all know the difficulties that we had with the original notion of individual learning accounts, but virtually everyone to whom I have spoken in the further education and training sector has acknowledged that that initiative, although there were flaws in its design structure, unleashed something in personal commitment to education and training that we should value and capture. That is why, in my view rightly, we are looking to trial those learner accounts from September.
On the specific arguments, the clause is about ensuring that there is a duty in relation to diversity and choice.

Robert Wilson: We spoke earlier about savings to the Learning and Skills Council. Does the Minister agree that the provision of diversity and choice could actually lead to an increase in costs for the LSC? Once choice is introduced into the system, it has the potential to cause major shifts in the nature of the market because of the introduction of learner choice into the marketplace. Has an impact assessment of the potential for the LSC to incur increased costs been carried out?

Bill Rammell: The hon. Gentleman is eliding the issue of expenditure on administration, which was his original point, with expenditure on the provision of the service to the young person or adult. In terms of a variety of providers being able to meet that demand, we stand by the Government’s track record of investing in the further education and training sector in a way that has not happened in the past.
In certain circumstances, there will be a need to open up the market to new entrants, which is only one of a range of options that can be used to tackle poor quality. The right intervention will depend on the circumstances, but under the right circumstances contestability in competition can act as a powerful lever to raise quality by increasing the rewards to good providers and the penalties for poor providers. However, as we said in the White Paper, it is important that there is not competition for its own sake. The LSC will review provision every five years in each area to establish whether competition is needed to improve quality, promote innovation or expand provision, and new and existing providers throughout the country will be able to bid.
To respond to the point made by the hon. Member for Brent, East, all providers will have to meet rigorous quality criteria, which will include the ability and commitment to collaborate with other providers when appropriate and to deliver curriculum choice in 14-to-19 learning.
I want to make it clear that further education colleges have nothing to fear from that competition and the expansion of the demand-led approach. Before we launched the train-to-gain initiative, further education colleges were nervous about how successful they would be under it. In fact, they have been very successful in gaining the business, which demonstrates their quality and their success. I urge the Committee to agree that the clause stand part.

Question put and agreed to.

Clause 6 ordered to stand part of the Bill.

Clauses 7 to 13 ordered to stand part of the Bill.

Clause 14

Incorporation of further education institutions

John Hayes: I beg to move amendment No. 26, in clause 14, page 10, line 7, leave out ‘Learning and Skills Council for England’ and insert ‘Secretary of State’.

Peter Atkinson: With this it will be convenient to discuss amendment No. 28, in clause 15, page 10, line 40, leave out ‘Learning and Skills Council for England’ and insert ‘Secretary of State’.

John Hayes: We are making progress and storming through our consideration of the Bill with the alacrity that one would expect.
Clause 14 concerns the power to incorporate further education colleges. In Wales, the power is being transferred to Welsh Ministers, yet in England, the powers are being transferred from the Secretary of State to the Learning and Skills Council. Why should the powers be held by accountable Ministers in Wales, but by the somewhat less accountable—I choose my words carefully—Learning and Skills Council in England?
These are probing amendments to discover from Ministers why the Learning and Skills Council is being given this role. I said earlier that the problem is not what the Bill contains, but what it does not contain, but at this juncture I want to point out an exception to that general rule. In some ways the Bill reinforces, or embeds, the Learning and Skills Council in a process of managing and funding skills that is not entirely consistent with where the Leitch review and its likely repercussions will take us. I suspect that in the coming months and years we might seek to remove powers from the LSC, rather than adding to its already extensive competence.
This small aspect of the Bill is an example of where it seems to me that we are embedding the authority of the LSC. When we come to consider the LSC’s relationship with further education colleges in respect of college principals, governors and managers, we will see another example. I thus qualify my earlier remark just to say, in that respect, that what the Bill does might not be helpful or in tune with current thinking. This probing amendment is designed to establish exactly what Ministers feel about that issue. I look forward to hearing the Under-Secretary’s response before deciding whether to test the mood of the Committee on this small but important matter.

Phil Hope: The amendment moved by the hon. Gentleman would, in effect, maintain the current arrangements. We set out our ambition in our White Paper on FE reform entitled “Further Education: Raising Skills, Improving Life Chances”. Our ambition is a simplified and more flexible FE system, and we have the aim of improving performance, increasing choice and improving participation. It is by transferring the powers of the Secretary of State to establish or dissolve a FE corporation to the LSC that we are underpinning the reforms that we set out in that White Paper.
Under the current arrangements, the Secretary of State’s decision to establish or dissolve FE institutions is based on information and a recommendation provided by the LSC. By transferring those powers to the LSC, we are making the current practice simpler, quicker and less bureaucratic—I must say that I think that it will also be more transparent.
Having listened to the hon. Member for South Holland and The Deepings debating issues of bureaucracy in many other parts of the House, I am sure that he would welcome the fact that the clause will not only improve the pace at which decisions can be made and the transparency of those decisions, but reduce the bureaucracy involved. As the LSC is the body responsible for planning and funding high-quality education and training, both for young people and adults, we believe that it is best placed to ensure that the most appropriate delivery arrangements are in place for learners in any particular area.
I want to make the important point that we will retain the current requirement that the LSC must publish proposals to establish and dissolve FE corporations, with some appropriate modifications. That requirement is set out in regulation—S.I. 2001, No. 782. In particular, there is a requirement to consult local partners and consider their views before any proposals are finalised. I hope that that gives the hon. Member for South Holland and The Deepings the assurance that after making this technical change, there will be no diminution in the extent of consultation or engagement with the local community.

John Hayes: One can imagine the circumstances that the Minister describes being fairly dramatic ones. The power that we are discussing would be unusual and would not be exercised in the usual course of events. What right of appeal would there be? What procedure would take place in respect of an appeal? Also, at what point and in what circumstances would the Secretary of State take the power? Answers to those questions might be beneficial to the Committee as we try to decide whether we need to vote on this issue.

Phil Hope: The regulations spell out the conditions under which the LSC must publish its proposals. Clause 16 goes into more detail and clause 10, which we have already considered, gives further clarification on the directions that a Secretary of State might need to give if the LSC was to make a decision that could be described as unreasonable or flawed in some way. The Secretary of State will still have the ability to intervene if he judges that a decision falls into one of those categories. We have considered already clauses that will give the Secretary of State the opportunity to intervene when those rare circumstances occur.

John Hayes: I am seeking clarification because I am beginning to regret the fact that we sped through clause 10—it sounds like we should have had an immensely detailed debate on it. However, will the Under-Secretary be absolutely clear? He said that if the Learning and Skills Council was to act in an unreasonable or perverse way, the Secretary of State would have the power to intervene. Could that be stimulated by an appeal? Would there be an opportunity for those affected to make a case to the Secretary of State? Are there circumstances in which his scrutiny would be required?

Phil Hope: Clause 16 clarifies the process under which the LSC must publish, consult on and carry forward its proposals. A complete process is in place whereby local partners and others affected by its decisions can be consulted formally on the proposals and see the LSC’s decision-making process. I hope that that gives the hon. Gentleman the reassurance that he requires.
If the Secretary of State feels that the LSC has failed to discharge its duty to publish proposals or to carry out that consultation process, or that it is proposing to act unreasonably, he can issue directions. I hope that we have processes in place to ensure that there are opportunities for individuals to influence the LSC’s decisions through the publication of, and consultation on, its proposals, and a fall-back position if the LSC is deemed to have acted unreasonably or failed to discharge its duty.

John Hayes: The Under-Secretary is being immensely generous in giving way and clarifying his position. Will he deal with my initial point about the apparent inconsistency between Wales and England? I made the point that one set of circumstances will apply on one side of the border, but that a different one will apply on the other. It would be helpful if he made clear his views on that.

Phil Hope: I regret not responding to that point before. The power to establish FE corporations in Wales was transferred to the National Assembly for Wales in 1999. By virtue of the Government of Wales Act 2006, that power thus transferred to Welsh Ministers when the new First Minister was appointed. The clause thus makes no substantive change to the situation in Wales, unlike the decisions that affect England. On that basis, I urge the hon. Gentleman to withdraw his amendment.

John Hayes: We are making such good progress that I think that it would be unreasonable to press the amendment to a Division. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 14 ordered to stand part of the Bill.

Clause 15

Dissolution of further education corporations

John Hayes: I beg to move amendment No. 27, in clause 15, page 10, line 26, leave out subsection (4).
Having started somewhat slowly, we are moving ahead with great speed. I note that my hon. Friend the Member for Upminster, with her typical efficiency, has passed me the details of the amendment. It would delete the provision that states:
“An order under this section made by the Learning and Skills Council for England in respect of a further education corporation in England may provide for the transfer to the council of property, rights and liabilities of the corporation”,
and that the
“council must obtain the consent of the Secretary of State before making provision of a kind mentioned in subsection (3A).”
The gist of my argument is similar to that on the previous group of amendments: the subsection seems to transfer power to the Learning and Skills Council. We are concerned throughout our consideration of the Bill that the necessary accountability for decisions, which rests quite properly with Ministers through this place, should be maintained. Official Opposition Members have some reservations about the power of the Learning and Skills Council and the way in which it is exercised.
Let me lay my cards on the table in that respect because it is important that we are not seen to be dogmatic about this subject. Of course, we recognise that much of the work of the council is necessary and that much of the money that it spends would be spent under whichever structure were to ensue from changed considerations of policy in this area.
We do not believe that we will save all that the council spends simply by changing the structure. Heaven knows that the vast bulk of that money is spent for good purpose, but that does not mean that there is neither room for greater efficiency, nor scope for reducing bureaucracy, given that we are talking about a budget that is considerably bigger than that of the Royal Navy. The Government have acknowledged that in what they have said today and previously. The structural changes that they believe will make the body more lean and efficient have been advertised to the Committee and have been set out previously. Ministers say that they are determined to ensure that there is the kind of value for money that is bread and butter to Conservative Members because efficiency and effectiveness are our second names in the official Opposition.
We recognise that there has to be a management and funding structure and expenditure on such matters, but we want to test Ministers throughout the Committee to ensure that all the money that is expended is best spent for the best purpose. With this amendment, as with the last one, we want to be absolutely sure that, in transferring authority to the Learning and Skills Council, we do not embed a system that could be improved. I await with interest the Minister’s comments on those matters.

Phil Hope: I congratulate the hon. Gentleman on coping so well with the pace of the Committee’s proceedings so far. The amendment would prevent the transfer of property rights and liabilities by the Learning and Skills Council to itself when a further education corporation is dissolved. Why do not we wish to support that amendment? Under the current arrangements, the Secretary of State may, by order, transfer to the LSC the property rights and liabilities of a dissolved further education corporation, where he deems it necessary and appropriate. In future, it is possible that the LSC might need temporarily—I emphasis that word—to transfer such rights and liabilities to itself, to achieve the best results for an area. In what circumstances might the LSC need to do that? It might happen if it were not possible to find a suitable alternative body to which to transfer the property when two colleges merge, for example.
A merger is a common reason for dissolving FE corporations—seven mergers of FE corporations will take effect during the summer, and more are under discussion. That is part of the process of developing the FE system. The mergers have been discussed and planned over time to ensure more effective local arrangements. It will be a temporary requirement in cases where we cannot find a suitable alternative body to which to transfer the property. In such cases, we will require the LSC to seek the prior agreement of the Secretary State before it transfers the assets to itself as part of the process of managing the merger. It is expected that the provision will be used rarely, if at all. However, we are trying to anticipate situations that might arise and provide contingency arrangements. I ask the hon. Gentleman to withdraw the amendment, given my account of the purpose of the clause and the safeguards that we are putting in place.

John Hayes: I understand those safeguards, and, given the Minister’s comments, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 15 ordered to stand part of the Bill.

Clause 16

Publication of proposals

John Hayes: I beg to move amendment No. 29, in clause 16, page 11, line 4, leave out subsection (2).

Peter Atkinson: With this it will be convenient to discuss the following amendments:
No. 19, in clause 16, page 11, line 10, leave out ‘and (2A)’ and insert ‘(2A) and (2B)’.
No. 20, in clause 16, page 11, line 16, at end insert—
‘(2B) The third requirement is that the council—
(a) has regard to any representation from a local authority which has children’s services and education responsibilities in the area in which the establishment or dissolution of a further education corporation is proposed, and
(b) provides such an authority with written reasons for any decision to establish or dissolve a corporation.’.
No. 36, in clause 16, page 11, line 16, at end insert—
‘(2B) The third requirement is that, when the council is considering proposals to establish or dissolve furthereducation corporations, it must abide by guidance as set outin subsection (2C).
(2C) The council must, after considering representations, publish a policy statement which must include reference to—
(a) the preferred structure of provision of post-16 education;
(b) the need to ensure a choice of qualifications and courses at all levels;
(c) the impact of any new provision of post-16 education on existing providers of post-16 education;
(d) the procedure to be followed when two or more further education corporations are seeking to merge.’.

John Hayes: This, in a sense, is more of the same, because with clause 16 we are in the business of empowering the Learning and Skills Council and qualifying those powers. Much of this part of the Bill, as I said at the beginning of the sitting, is about changing structure and competence with respect to the Learning and Skills Council. It is important that accountability should be retained, that the circumstances in which the competencies are exercised should be, as the Minister said, transparent and, therefore, well understood by all concerned and that there should be appropriate sets of safeguards to ensure that perverse or unreasonable decisions can be challenged from the bottom up.
My anxiety about this part of the Bill—although the Minister has been reassuring about previous clauses—is that that transparency may not be all that it should be and that the lines of accountability will become more blurred. The amendment is intended to probe in that respect. The clause would make modifications to the 1992 Act, reflecting the transfer of powers to establish and dissolve further education corporations, and we have concerns about that.
We look to a halcyon age of FE colleges. I am disappointed that my hon. Friend the Member for Daventry has had briefly to leave the Committee, as he has already made a telling contribution to our considerations. He was one of those hon. Members who were pivotal in establishing that halcyon age of incorporation. Many college representatives tell me that they look back to those golden days, post-incorporation, when the FEFC provided light-touch regulation, affording them a degree of freedom to innovate and excel. College principals to some degree feel that much, or at least some, of that has been lost since, with an altogether more bureaucratic structure surrounding them, and an unhelpful level of micro-management.

Austin Mitchell: All this talk about a halcyon age under the Tories is bringing tears to my eyes. Does the hon. Gentleman agree, as an avid reader of Private Eye’s higher education supplements, that that halcyon age of freedom also led to problems? Companies were established and failed; relationships were established with Singapore, Malaysia and elsewhere—there was scandalous extortion; and there were various financial problems accruing from the power given to principals to run colleges’ financial affairs in theirown way.

John Hayes: I shall break a habit, Mr. Atkinson, because I generally do not repeat private conversations in Committee or on the Floor of the House but I must reveal to you that the hon. Member for Brent, East and I had a conversation before the Committee began. She implored me not to speak at too great length or indeed—

Austin Mitchell: Why?

John Hayes: Members across the Committee begged me to take no notice of the hon. Lady. They told me that I should not restrain myself and that within the very strict guidance of a diligent Chairman, I should feel free to range widely because they enjoy my casting pearls before them, but I owe an obligation to her—I know that she has a busy social diary and I do not want to keep her from it.

Austin Mitchell: If the hon. Gentleman is casting pearls, what are we?

John Hayes: The hon. Gentleman has rightly drawn attention to the price of freedom. In a world which is frail and faulted, as we have fallen from the state of grace, the price of liberty is that sometimes there are imperfections in the way in which individuals and organisations operate. If the choice is between the risk of that kind of imperfection and a system which is so strangled by bureaucracy and so micro-managed from the centre that every opportunity for any kind of imaginative exercise of the very substantial talents that lie in the FE sector is limited, I will go with the risk of imperfection. I would rather that than see people constrained; strangled and suffocated by bureaucracy, over-regulation and control freakery. I know the hon. Gentleman would no more want to see that than Opposition Members would. I happily give way to the Minister, as we are running into lunch.

Bill Rammell: I thank the hon. Gentleman for giving way. In terms of the pearls of wisdom he is positing before the Committee, I have to place on the record that in the last two years I have not met one further education college principal who has told me that we should return to the halcyon days of the Further Education Funding Council. If, however, in my extensive conversations with numerous FE principals round the country I have missed somebody, perhaps the hon. Gentleman could tell us which individual said that we should return to that structure.

John Hayes: I have already revealed one small element of our private discourse, and I hope that the hon. Lady will forgive me, but now I shall reveal something more. I hope that in the course of the time that I do my job—I shadow half of one Minister and the whole of another, so I am doing one and a half jobs—the Opposition can lay out a plan for how we might move to a system where colleges were self-regulated to a much greater degree.
I am not saying anything very controversial. That was the recommendation of the Government’s own report, the Foster report. Sir Andrew Foster said that colleges should move to self-regulation by degree. He lamented the fact that there are 17 bodies with a supervisory, inspection or regulatory role in respect of FE colleges. We will happily put forward plans during what I hope will be our short period in opposition, which is becoming shorter by the day, that will provide the opportunity, when we enter government, to move to circumstances where colleges can enjoy a much greater degree of freedom because that freedom will allow them to innovate and excel.

Peter Atkinson: Order. Before the Minister replies, may I remind the Committee that we started off discussing the dissolution or the establishment of further education corporations? We seem to be talking on a rather wider level than was perhaps justified by the amendments.

Bill Rammell: Very briefly, Mr. Atkinson, I take your guidance, but an important point has been raised. I also want to ensure that we do not get on to clause 17 before this afternoon. The hon. Gentleman has talked about the importance of self-regulation, and I agree with him. Is he not aware of the body of workand the working party that we have established under Sir George Sweeney’s chairmanship? It is taking forward that agenda on self-regulation.

John Hayes: The Minister says that the Government are advancing self-regulation and, to draw attention to the specifics of this amendment, it is critically important that we are bold and brave about taking the necessary steps to ensure the kind of freedoms that I have described. It is not appropriate to maintain the level of bureaucracy. The Government have abolished one body and added another with a role in managing, regulating or controlling FE colleges during the hon. Gentleman’s tenure. I am not sure that shows the kind of determination that I want to see in respect of the Foster recommendations.
We need to be much bolder and braver about allowing for a system which is diverse, subject to much greater levels of local accountability and is less directly managed from the centre. If one follows through the combination of Leitch and Foster and moves to a demand-driven system with a heavy emphasis on local economic activity and need, with deregulated colleges we could have a system in which colleges were responsive and imaginative in the kind of partnerships that they form to deliver the skills agenda, to which this side of the Committee is committed and which the Government are grudgingly and hesitatingly following us towards.

It being One o’clock, The Chairman, adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at Four o’clock.